Codere Online Luxembourg, S.A. (CDRO) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates mixed signals: stable NGR with currency impacts, a challenging Spanish market, and positive EBITDA. The Q&A highlights regulatory challenges and cautious optimism in Mexico. The share buyback and potential profitability improvements are positive, but concerns about Colombia's VAT impact and unclear guidance on its viability add uncertainty. Overall, the sentiment is balanced, leading to a neutral stock price expectation.
Key Financial Performance
Net Gaming Revenue (NGR) EUR 55 million, roughly flat year-over-year due to the devaluation of the Mexican peso. On a constant currency basis, NGR would have been EUR 61 million, reflecting a 12% increase year-over-year.
Casino Segment Contribution 61% of total NGR, showing stabilization at around 60% casino mix.
Average Monthly Active Customers Increased by 7% year-over-year, contributing to NGR growth.
Average Monthly Spend per Active Customer Decreased by 5% year-over-year, primarily due to the weaker Mexican peso.
First-Time Depositors (FTDs) 78,000, a 7% increase year-over-year, with an average CPA of EUR 218.
Adjusted EBITDA Positive EUR 2.3 million, including a EUR 6.3 million contribution from Spain (5% increase year-over-year). Mexico's contribution was slightly negative due to increased marketing investments.
Net Gaming Revenue in Colombia EUR 1.6 million lower year-over-year due to the introduction of a value-added tax on player deposits.
Net Gaming Revenue in Panama EUR 0.8 million higher year-over-year, doubling from the prior year due to product improvements.
Net Gaming Revenue in Mexico EUR 29 million, a 3% increase year-over-year. On a constant currency basis, NGR would have grown 23%.
Net Gaming Revenue in Spain EUR 22 million, flat year-over-year, with slightly higher spend per active customer offset by a 3% decline in active customers.
Total Cash on Balance Sheet EUR 45 million as of June 30, 2025, with EUR 41 million available.
Cash Flow Generation EUR 7.5 million of available cash generated in H1 2025, offset by a EUR 2.1 million negative FX impact, resulting in EUR 5 million total cash flow generation.
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Operating Highlights
Casino segment contribution: Casino segment contributed 61% of total net gaming revenue in Q2 2025, reflecting stabilization at around 60%.
Mexico market growth: Net gaming revenue in Mexico grew 3% to EUR 29 million despite a 19% devaluation of the Mexican peso. On a constant currency basis, growth would have been 23%. Average monthly active customers increased by 36% to 85,000.
Panama market growth: Net gaming revenue in Panama doubled compared to the prior year period, reflecting product improvements.
Net gaming revenue: Net gaming revenue was EUR 55 million, flat versus prior year due to currency devaluation. On a constant currency basis, it would have been EUR 61 million, a 12% increase.
Adjusted EBITDA: Adjusted EBITDA was EUR 2.3 million, including a EUR 6.3 million contribution from Spain, 5% above prior year.
Marketing investment: Marketing spend in the second half of 2025 is expected to be lower than the first half, with a focus on Mexico.
Share buyback plan: Repurchased 106,000 shares for EUR 700,000 under the share buyback plan.
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Risk or Challenges
Devaluation of the Mexican Peso: The Mexican peso devalued significantly, leading to a EUR 5.7 million negative impact on net gaming revenue in Q2 2025. This currency fluctuation has been a major headwind since the federal elections in June 2024 and continues to affect financial performance.
Introduction of Value-Added Tax in Colombia: A new value-added tax on player deposits in Colombia has negatively impacted net gaming revenue in the region, reducing it by EUR 1.6 million in Q2 2025.
Competitive Landscape in Spain: The reintroduction of welcome bonuses in Spain has intensified competition, leading to lower spending levels from both new and existing customers. This has created a more challenging market environment.
Marketing Investments in Mexico: Increased marketing investments in Mexico, particularly around the Club World Cup sponsorship, have led to slightly negative EBITDA in the region, despite strong customer acquisition.
Currency Exchange Rate Risks: The devaluation of both the Mexican peso and the U.S. dollar has resulted in a EUR 2.1 million negative FX impact on cash balances, affecting overall cash flow generation.
Selective Promotional Activity in Spain: A 3% decline in active customers in Spain was noted due to more selective promotional activities, reflecting challenges in maintaining customer engagement in a competitive market.
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Guidance & Outlook
Net Gaming Revenue Outlook: The company expects net gaming revenue for 2025 to be between EUR 220 million and EUR 230 million.
Adjusted EBITDA Outlook: Adjusted EBITDA is projected to range between EUR 10 million and EUR 15 million for 2025.
Marketing Spend: Marketing spend in the second half of 2025 is expected to be lower than in the first half, contributing to higher EBITDA generation in the latter half of the year.
Mexican Market Growth: The company anticipates strong returns from both existing and new players in Mexico, supported by a better-than-expected evolution of the Mexican peso towards year-end. Mexico remains a priority market, with expectations of significant growth leading up to and during the 2026 World Cup.
Currency Impact: The exchange rate headwind from the Mexican peso is expected to persist into Q3 2025 but will be less significant compared to prior quarters.
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Shareholder Return Plan
Share Buyback Plan: Through July 30, 2025, the company repurchased approximately 106,000 shares under the share buyback plan, with a total investment of around EUR 700,000.
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Key Q&A
Q:What is the current competitive environment in Spain after the reintroduction of welcome bonuses?
A:The competitive environment in Spain remains challenging due to regulations. Competitors are spending money on welcome bonuses to attract players. However, the company has stabilized its performance and does not foresee regulatory changes in the near future.
Q:How did sports seasonality, including the euros and Club World Cup, impact performance in Spain?
A:The euros had less impact than expected, despite Real Madrid's progress. Events like Wimbledon and the Club World Cup provided some traction, but overall, seasonality remains a factor. A stronger season start is expected in the current quarter.
Q:What are the recent marketing initiatives in Mexico targeting lower LTV players?
A:The company tested mobile app channels for three months, which provided low LTV and low CPA traffic. After evaluation, this strategy was ruled out. The initiatives were not a response to peso devaluation but part of ongoing UA strategy experimentation.
Q:What factors contribute to profitability improvement in the back half of the year?
A:Profitability improvement is attributed to the River Plate sponsorship rolling off, mitigation of the VAT impact in Colombia, and strong unit economics in Mexico. The strengthening Mexican peso also contributes to optimism for strong EBITDA performance.
Q:What makes the Mexican market unique, and can its playbook be applied to other Latin American markets?
A:Mexico benefits from lesser competition, local presence, and organic market growth. The playbook can be applied to other markets, but higher media costs and competition require more investment. Replication in markets like Brazil would need significant funding.
Q:What is the impact of the VAT in Colombia, and is the market viable if the VAT continues?
A:The VAT has significantly impacted Colombia, reducing revenue by about 40%. The company has minimized operations to breakeven. The market's viability under continued VAT conditions would require further analysis.
Q:What are the company's thoughts on share repurchases?
A:The company is discussing share repurchases at the Board level and has deployed both opportunistic and planned repurchase strategies. They aim to repurchase shares at attractive prices.
Q:What are the company's NOLs, and could they benefit a potential buyer?
A:The company has material NOLs from past investments and losses in Mexico and Spain. These could be relevant in the context of a future acquisition or transaction.
Q:Review of Unclear Management Responses
A:Management avoided directly answering whether the Colombian market would remain viable if the VAT continues. They stated it would require further analysis, leaving the question open-ended.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Capital
Chief
Codere Online
Colombia
Conference
EUR cash
EUR gaming
EUR period
Executive
Investor Relations
NASDAQ
Officer
Page EUR
Page gaming
Panama
Research Division
Spain landscape
Unidentified
World Cup
account
addition
amount
audit fee
currency basis
devaluation peso
evolution peso
factor
gaming EUR
generation
headwind
plan
regard
share
statement
uncertainty
CDRO Transcript
Codere Online Luxembourg, S.A. (CDRO) Q1 2026 Earnings Call Transcript
Positive5-7
The earnings call presents a strong financial performance with 13% YoY NGR growth, increased active customers, and improved EBITDA margins. While average customer spend slightly decreased, the diversified customer base and marketing efficiency are positives. The Q&A session highlights manageable competitive pressures in Mexico and ongoing AI implementation, though lacking specifics. The guidance for 2026 shows confidence, despite not expecting a substantial World Cup impact. Overall, the company's growth and efficiency improvements suggest a positive stock reaction, especially with potential buybacks and no immediate market cap data.
Codere Online Luxembourg, S.A. (CDRO) Q4 2025 Earnings Call Transcript
Positive2-26
The earnings call highlights strong financial performance with increased FTDs, improved marketing efficiency, and robust revenue growth in key markets like Mexico. Despite regulatory challenges, the company has effective strategies in place, such as leveraging cost efficiencies and focusing on core markets. The Q&A reveals cautious optimism, with management addressing concerns about tax impacts and competitive dynamics. Overall, the positive financial metrics, strategic focus on growth markets, and effective risk management suggest a positive outlook for the stock price.
Codere Online Luxembourg, S.A. (CDRO) Q2 2025 Earnings Call Transcript
Unknown8-1
The earnings call indicates mixed signals: stable NGR with currency impacts, a challenging Spanish market, and positive EBITDA. The Q&A highlights regulatory challenges and cautious optimism in Mexico. The share buyback and potential profitability improvements are positive, but concerns about Colombia's VAT impact and unclear guidance on its viability add uncertainty. Overall, the sentiment is balanced, leading to a neutral stock price expectation.
Codere Online Luxembourg, S.A. (CDRO) Q1 2025 Earnings Call Transcript
Unknown5-16
The earnings call presents a mixed outlook. While there is growth in key metrics like net gaming revenue and active users, challenges such as regulatory compliance issues, currency exchange risks, and competitive pressures in Spain temper optimism. The share buyback plan is a positive, but its limited execution so far reduces impact. The Q&A reveals management's lack of clarity on certain issues, which may raise investor concerns. Overall, the mixed signals and uncertainty result in a neutral stock price prediction.
CDRO Report
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